November 24, 2005

 

CBOT Soy Review on Wednesday: Tumbles to 9-month low on Spec sales

 

 

Soybean futures on the Chicago Board of Trade ended with double-digit losses Wednesday, tumbling to nine-month lows, as bearish underlying fundamentals and technical weakness uncorked speculative fund selling, traders said.

 

January soybeans finished 10 1/4 cents lower at US$5.62, December soymeal settled US$2.90 lower at US$170.70 a short tonne, and December soyoil ended 35 points lower at 21.63 cents a pound.

 

Bearish fundamentals coupled with a lack of supportive inputs in the market set the stage for the losses, with declines accelerating once technical support at the fall lows were breached, said a CBOT commission house broker.

 

The nearby January contract fell to its lowest level since Feb. 17 and its lowest level on continuation charts since Oct. 11.

 

The fundamental picture of the market, with bird flu concerns, lagging export demand, and the absence of threats to South American crops, cast a bearish cloud over prices, keeping buyers sidelined heading into the Thanksgiving holiday. Thin holiday volume allowed for the declines to be exaggerated, with bearish technical momentum leaving futures vulnerable to speculative sellers, traders added.

 

Commodity fund selling was estimated at 6,000 contracts.

 

Meanwhile, the U.S. Census Bureau's crush report said 158.2 million bushels were crushed in October, in line with the average trade estimate of 158 million bushels. Soyoil stocks were seen at 1.864 billion pounds, above the average estimate of 1.758 billion pounds as well as the high end of the range. The yield on soyoil was 11.59 pounds per bushel. Soymeal stocks were 316,137 short tonnes, above the average trade estimate of 272,700 tonnes.

 

The DTN Meteorlogix weather forecast said there are no prominent crop weather problems in South America. Argentina had rainfall of up to one inch over the heart of its corn and soybean belt overnight. In Brazil, scattered thundershowers developed in southern Mato Grosso, which continues a trend of favorable crop weather during the past month.

 

During the next five days, southern Brazil (Rio Grande do Sul and Parana) is expected to have rainfall of up to one inch, followed by hot temperatures to start out next week. This rainfall pattern will extend north into Mato Grosso during the weekend. Thus, crop weather will continue to be favorable for soybean development, Meteorlogix added.

 

On tap for Friday, U.S. Department of Agriculture is scheduled to release its weekly export sales report 7:30 a.m. CST (1330 GMT). Analysts surveyed by Dow Jones Newswires anticipate soybean commitments between 500,000 and 700,000 metric tonnes, soymeal sales between 75,000 and 125,000 tonnes, and soyoil sales between 4,000 and 9,000 tonnes.

 

CBOT grain and oilseed markets will be closed on Thursday for the Thanksgiving Day holiday and will close at noon CST Friday.

 

In pit trades, Citigroup bought 800 January and RJ O'Brien bought 300 January. ADM Investor Services, Refco Investor Services, Citigroup, Fimat and RJ O'Brien were featured sellers.

 

South American soybean futures ended lower across the board. The March futures settled 10 1/2 cents lower at US$5.95 1/2.

 

 

SOY PRODUCTS

 

Soymeal futures ended lower, pressed to three-week lows on speculative sales. Technically inspired selling weighed on prices, with borrowed weakness from soybeans and a higher-than-expected October stocks figure in the monthly Census crush report adding to the losses.

 

Soyoil futures stumbled lower, extending the current downward move to a nine-month low. Speculative-led selling pinned prices in negative territory, with confirmation of large oil yields in the October census crush report providing the fundamental weakness to extend the bearish theme, traders said.

 

December oil share ended at 38.78%, and the December/January crush was at 51 1/2 cents.

 

In soymeal trades, Bunge Chicago and Cargill were buyers. ABN Amro, Calyon Financial, Man Financial and RJ O'Brien were principal sellers.

 

In soyoil trades, ADM Investor Services, Bunge Chicago, Cargill and Fimat were key buyers. ADM Investor Services, ABN Amro, Citigroup, O'Connor, Prudential Financial, RJ O'Brien, Rand Financial and Tradelink were featured sellers.